Death of the Disc-Based Game

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Expensive, one-time purchases are facing extinction. So what comes next?

By Charles Onyett

The idea of a steep, one-time purchase price for games can't last. Like the newspaper, the hardcover book, and the compact disk, the expensive disc-based method of video game distribution is on its way out, a process that's only accelerating as more developers and publishers test out alternative pricing models both on PC and console platforms.

The full-priced retail game might not disappear until after the next generation of consoles, but it will eventually. Major franchises like Call of Duty will continue to move huge quantities through ever-expanding brand recognition, but new or lesser known intellectual property is doomed to either flounder or catastrophically fail if they're sitting on a store shelf bearing a prohibitively high price tag.

The answer is to lower the price, as many have been doing in the PC realm with games on digital storefronts and social networks. Make the game free, let people play the real game, not a demo, and then use the strength of the gameplay to advertise the product. Low cost gaming is exploding all over. It's part of why the App Store took off, capitalizing on the all-consuming power of the impulse purchase.

Even with EA's help, Shadows of the Damned bombed.

Pricing models in video games have been in a state of flux for some time now, so the decline of the high, one-time purchase price isn't a new idea. It's just that most of the experimentation has been in the PC market, and it's taken a while for many of the ideas to take root in North America. Mostly this has to do with the free-to-play concept that dominates gaming in countries like China and South Korea. Initial access costs nothing, then once you're in the game it's possible to pay for specific items, dungeons or expanded customization options.

The PC retail market, with the exception of successes like The Sims and anything Blizzard delivers, is pretty much dead. Most that buy games do so online, yet even the biggest digital distributor, Valve's Steam, isn't necessary for success. With Minecraft, Markus Persson and his development studio Mojang proved that all you really need is a great idea and low barrier for entry. Almost three million have purchased Minecraft at this point, and the game isn't even considered complete. Instead of waiting three to five years for a team to crank out a finished product to eventually dump onto the market with fingers crossed for a single-purchase flat fee, the game was made available before it was finished and for a low price. The result – widespread grassroots advertising through YouTube, aggregators and forums – led to a remarkable story of success, not only in game design but method of distribution.

Minecraft's making millions.

This kind of flexibility is possible in the PC market because there's no official oversight. There's no Nintendo, Microsoft or Sony to give the ultimate 'yes' or 'no' as to whether something's viable. That's why the PC market is and will continue to be at the vanguard of distribution innovation. Microsoft and Sony have made efforts to catch up. In a clunky experiment, Microsoft made Fable II available through Xbox Live in downloadable episodes. Though it didn't get a lot of attention, this is exactly where the console market needs to move in the next five years.

Asking consumer to pay full price for access to parts of a game they might not care about just doesn't make sense. If I don't care about, say, BioShock 2's multiplayer mode, why am I forced to buy it if all I wanted was the single-player portion? We've already seen this type of thinking in action in the Xbox 360 and PlayStation 3's life cycles where games are divided into chunks of downloadable content to be sold post-release, which is fine for the super hardcore user who'll pay for anything related to a game. The greedy mistake, for anyone that isn't making Call of Duty, Uncharted or Halo, is continuing to charge full price for the base product. Instead, it should be broken up into chunks so you're not forced into buying unwanted content.

Why, for instance, do I have to buy every fighter in Street Fighter IV? Why can't I pay a low price for the game and buy each fighter individually, and test each out for a limited time for free? There could still be a discount for purchasing all at once, but if I know I'm never going to play as Blanka, why am I forced to pay for him? Why don't more shooters adopt the free-to-play model seen in games like Battlefield Play4Free, where I don't have to pay for guns I'm not going to use?

It's going to be increasingly more difficult to get people to care about paying full price considering the ever-increasing number of low cost, high quality downloadable games. The physical game disc and shops like GameStop are going to die out eventually, just as iTunes killed records and Kindle knocked out Borders. Tying the profitability of a long-term strategy to a doomed distribution method is never going to meet with success, which makes it all the more important that Nintendo, Microsoft and Sony build in the possibility to experiment with their upcoming consoles.

THQ has the right idea with MX vs. ATV Alive. It launched at a discounted price (though still too high) and let players download in-game items and tracks thereafter, shaving a percentage of the full price off in the hope that a small percentage of hardcore users would buy up all the additional content. Sony's free-to-play Free Realms is already out on PlayStation 3, offering a simple, casual MMO experience. These are testing grounds for a new console standard.

Nintendo seems to be losing touch.

The real goals should be the more advanced models Blizzard and Valve have been working on that offer subscription fee alternative players can profit from too. In the now free-to-play Team Fortress 2, players can create and sell in-game items for their own profit. Even though Diablo III will be a full-priced game, Blizzard takes this idea one step further, letting anyone put an item up for auction through Battle.net and potentially net a real world financial reward, with Blizzard of course taking a cut on every exchange. By centralizing all transactions under its official oversight, Blizzard delivers a long-term incentive to keep players hooked and spending money. The core of this appeal: anyone can make money by playing the game without any technical knowledge or skill. That's a powerful, and entirely optional, reason for a huge audience to continue logging in.

One aspect of the console market that publishers have been trying to fight for years is the issue of used game sales. The answer so far has been to lock features with activation codes available to those who buy the game new. Then if someone buys it used, a second purchase needs to be made to play online, like with the Kombat Pass in NetherRealm Studios' Mortal Kombat. Used games wouldn't be an issue at all if the entire industry was download-only. Sure some enjoy using their money to purchase a physical product, but as has been proven time and again across different industries, there's no sense in clinging to what's worked in the past. Evidence of companies attempting to move around these roadblocks is everywhere. Publishers of major franchises are taking the necessary steps, like EA's constant advertisement of its Origin digital download service and Blizzard's continued efforts to foster a Blizzard-only social network, that sets up titles to eventually bypass store shelves entirely.

Looking forward, beyond even the next generation of consoles, the future will involve services like OnLive. Though OnLive does not yet offer an ideal gaming experience, the notion of bypassing the need to upgrade hardware entirely makes too much sense to be ignored by console producers. It's the fastest, easiest, most direct method (at least for consumers) to access games. Instead of consoles, Microsoft, Sony and Nintendo would simply run OnLive-like services. They might sell unique input devices, but the entire concept of a physical disc and hardware setup will be archaic, irrelevant and ultimately difficult to profit from in this rapidly evolving industry where convenience is king.

I'm sure Sony and Microsoft know this very well, but Nintendo worries me. Their tablet-style controller for Wii U controller may recapture some of the Wii's sales magic, but it's a system bound to struggle without an App Store-style marketplace to back it up featuring classics as well as new games released day and date with retail versions. Nintendo's proven a lot of doubters wrong over the years, but it's also proven it has no idea how to build a modern online framework into any of its consoles. Though Nintendo is finally getting close to implementing a system for consumers to buy downloadable content on Wii U and 3DS, it's only just catching up to a standard that's existed for years. And scoffing at free-to-play games? That's a huge mistake.

The console that takes off in the next generation is the one that most successfully mimics what's happening in the PC market. There needs to be space for experimentation for all kinds of pricing models, and its integration into the user interface has to be seamless, not tacked on. Larger, easily expandable storage space, download options for every release and a flexible system that can easily accommodate change are all qualities of what will emerge as the market leader. As much as we've seen the notion of downloadable games and content take off in the past five years, it's only going to accelerate into the next generation, until the concept of opening a disc drive is as quaint as flipping through the pages of a Sunday paper.